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Insurance Regulatory Modernization Act Heard (HB 313)
The Oho House Insurance Committee heard sponsor testimony October 29 regarding HB 313 which would enact the Insurance Regulatory Modernization Act to revise the insurance laws regarding alternative investments, holding company systems, risk management, reserves kept for life insurance policies, automated transactions, reinsurance, and mergers and consolidations.
In sponsor testimony, Rep. Kunze said HB313 would "comprehensively update Ohio's regulatory insurance laws... There are seven different components: ... investment code reform; reinsurance reform; holding company reform; own risk solvency assessment (ORSA); standard valuation law [SVL]; life risk based capital (RBC) trend test; and the electronic delivery of documents.
Joint-sponsor Rep. Hackett said the bill is being introduced as a companion to SB140 to allow additional discussion and input.
Kunze said, "[The] proposed changes will give insurance companies greater flexibility when it comes to managing their surplus, while at the same time increasing the transparency of the investment process in concert with the Ohio Department of Insurance's (ODI's) priorities of solvency and consumer protection."
The section on investment code reform, said Kunze, would allow insurance companies "that have demonstrated success in safely administering their investment portfolios" to either continue following the very conservative "defined limits" in current law, or to have more options under the proposed "defined standards." The reinsurance reforms, she said, would "put Ohio in line with the National Association of Insurance Commissioner's (NAIC) Credit for Reinsurance Model Act (CRMA) which "recognizes movement toward a more global market while enriching appropriate state regulatory oversight."
The holding company reforms would put Ohio in line with the NAIC model act, said Kunze, and "give ODI more transparent authority to review various financial transactions and other enterprise risks in which insurance companies and their affiliates engage that could affect the solvency of the insurance company." The ORSA section would require certain insurance groups or stand alone insurance companies to complete an internal assessment of their current business plan and the sufficiency of their capital resources to support the plan, and to share a summary of it with ODI upon request. The supporting ORSA documents would remain confidential records that are not subject to subpoena or public disclosure.
The SVL section would adopt NAIC revisions to help create uniformity among the states. The RBC section would align life company RBC numbers, an early indication of potential problems, with those for property and casualty companies. The electronic delivery of documents section would be permissive and opt-in for customers, with safeguards for cancellations or non-renewals.
Hackett deferred several questions for future testimony from Michael Farley, assistant director for legislative affairs for ODI. Hackett told Rep. DeVitis the bill is "something the conservative industry wants to remain competitive. Something other states are already doing."
In response to Rep. Henne, Hackett said the bill is "moving a little bit from ultra conservative to a little bit more moderate: a little risk for more oversight, win-win."